Spain, Greece Launch Austerity Plans to Secure Aid


A fire bomb explodes among riot police during clashes in Athens.

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Also Thursday, Greece's coalition government agreed on a €11.5 billion round of harsh austerity cuts demanded by its international lenders. The measures had to be agreed or Greece would have been cut off from vital bailout loans that it needs to pay its way and keep it in the eurozone.

Finance Minister Yiannis Stournaras said the long-delayed agreement placed him in a stronger negotiating position ahead of talks Monday with representatives from the country's bailout creditors, who will have the final word on the cutbacks.

Greece has relied on international bailouts since May 2010. In return, it imposed a punishing austerity program, repeatedly slashing incomes, hiking taxes and raising retirement ages.

The conservative-led coalition has been debating the new cutbacks for about two months, but a deal was delayed by opposition from the two center-left junior partners — coupled with disagreements with European Union, International Monetary Fund and ECB austerity inspectors.

On top of the €11.5 billion ($14.8 billion) that has to be axed from state spending in 2013-14, Athens must also boost state revenues by an additional €2 billion over the next two years through tax reform and improved tax collection.

The three-party meeting came a day after more than 50,000 anti-austerity protesters took to the streets of Athens, in a demonstration marred by clashes between anarchists and riot police.

Fotis Kouvelis, head of the small Democratic Left party, said after Thursday's two-and-a-half hour talks that, despite the overall agreement, "some issues are still outstanding."

And Socialist PASOK leader Evangelos Venizelos said he would "struggle to the end to ensure that these measures are not across the board and are fair ... and that they are truly the last," as Samaras has pledged.


Barry Hatton in Lisbon and Nicholas Paphitis and Elena Becatoros in Athens contributed to this report.

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